Why the Three Certainties Matter

An express trust cannot exist unless three certainties are present: certainty of intention, certainty of subject matter, and certainty of objects. If any one certainty fails, no valid trust is created.

Certainty of Intention

The settlor must have shown an intention to impose on a trustee a legal obligation to hold property for the benefit of a beneficiary. No particular words are required — the court looks at substance. Merely “hoping” or “wishing” that property will be used in a certain way (precatory words) does not impose a binding obligation.

• Lambe v Eames (1871): “in any way she thinks best for the benefit of herself and her family” — no trust; precatory.
• Paul v Constance [1977]: repeated statements that money was “as much yours as mine” — sufficient intention to create trust.

Certainty of Subject Matter

The trust property must be identifiable with certainty. Two sub-issues arise:

• Tangible property: Must be segregated or separately identifiable. A trust of “50 of my 500 bottles of wine” fails if the bottles are physically indistinguishable and no segregation has occurred (Re London Wine).
• Intangible property: The rule is less strict. In Hunter v Moss [1994], a trust of 50 out of 950 identical shares was held valid because the shares were fungible. This is a controversial decision but remains good law.

The distinction between tangible and intangible property in certainty of subject matter is a classic SQE1 trap. Apply Re London Wine to physical goods and Hunter v Moss to shares and similar fungible intangibles.

Certainty of Objects

There must be certainty about who the beneficiaries are. The test differs by trust type:

• Fixed trusts: The “complete list” test — it must be possible to list all beneficiaries.
• Discretionary trusts: The “is or is not” test (McPhail v Doulton [1971]) — can it be said with certainty that any given person is or is not a member of the class?
• Powers of appointment: Also the “is or is not” test, but administrative unworkability (a class so wide as to make administration impossible) can invalidate the power.

Consequences of Failure

If a certainty fails after property has been transferred, the trustee holds on resulting trust for the settlor or the settlor’s estate. If no transfer has occurred, the property remains with the settlor.

Practise This Topic on Sqewise

Trusts questions in FLK2 often involve applying all three certainties to a short set of facts — spotting which certainty is at issue and identifying the correct test. Practise trusts questions on Sqewise to build speed and accuracy, and see the full SQE1 topic breakdown.

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